The pensions industry is split over whether, three years on, the government’s Help to Save initiative has been a success.
The accounts were announced by former prime minister David Cameron ahead of the 2016 Budget.
Figures released today show that 64,350 people have deposited just over £13 million in Help to Save accounts, receiving a combined bonus of around £6.5 million.
However, the government had said there were up to 3.5 million people who could take advantage of the reform.
Average deposits have been near the limit. At £44 a month they are only £6 a month below the government’s ceiling.
AJ Bell senior analyst Tom Selby says, regardless, “it is hard to escape the conclusion the programme has been something of a damp squib” given how hyped it was.
He adds: “While it is clearly positive over 60,000 people have benefited from a 50 per cent top-up on money saved through the scheme, that is a small fraction of the 3.5 million who could have claimed.
“Given the scheme is aimed directly at those on the lowest incomes, it is perhaps little surprise take-up has been so low. If you are on benefits and struggling to make ends meet, even a significant savings carrot will make little difference to your spending decisions.”
Other pensions industry figures encouraged greater awareness of the scheme through wider financial education.
Quilter corporate affairs director Jane Goodland says: “So much more can be done to give people the confidence and basic financial know-how. Government has said this scheme could help hundreds of thousands, but that is only going to happen if the scheme is combined with a sustained effort to improve financial awareness and education. Saving is not part of our DNA right now, and is under threat from the a consumer culture that makes it easy to spend at a tap, or take a loan in minutes.”
Aegon head of pensions Kate Smith said that the Help to Save uptake could spur people to look more seriously at the rest of their finances and savings.
She says: “The scheme will help people develop healthier saving habits and in the long term will hopefully inspire them to consider other savings such as workplace pensions and Isas. In the current low interest rate environment, cash saving won’t always feel rewarding, but with the government bonus, this scheme is very attractive.
“[The figures] indicate that each person has on average saved around £144 per person. When the government bonus is added this will be around £216. Although this is a good start, we would encourage people to save more to maximise the government bonus as the scheme has a very limited shelf life, particularly as savings won’t be tied up.”